Market Wrap: BTC Falls Below $20K as Crypto Bounce Loses Steam

The price of bitcoin and other major cryptocurrencies fell amid testimony by U.S. central bank Chair Jerome Powell, who said a recession might not be avoidable.Read MoreFeedzy

After surging earlier this week, bitcoin resumed its more recent slump toward $20,000 on Wednesday amid a sell-off by retail investors.

The largest cryptocurrency by market capitalization was recently trading at about $20,100, down over 4% over the past 24 hours. The decline comes two days after bitcoin climbed past $21,000 as investors bought a weekend dip to two-year lows.

“The global crypto market remains vulnerable to further selling pressure,” Oanda senior analyst Edward Moya wrote in an email, but he also noted that “a consolidation could be around the corner as the challenging macro environment is close to being fully priced in.”

FxPro senior market analyst Alex Kuptsikevich said that investors were premature in buying the latest dip because the wider economic conditions and the U.S. central bank’s monetary policy are less favorable for assets than they were during previous downturns.

“Retail shoppers risk being caught swimming against the financial current, which is hardly a successful strategy,” Kuptsikevich wrote. “History suggests that enthusiasts risk running out of steam soon, being left with depreciating assets and losing confidence for years that equity or cryptocurrency markets are a worthwhile place for their money.”

Most altcoins dropped in tandem with BTC, indicating that investors’ appetite for taking risks remains low. Ether (ETH), the token of Ethereum, the second largest blockchain, underperformed, dropping more than 6% in the last 24 hours.

The S&P 500 and the tech-heavy Nasdaq 100 index were roughly flat as investors digested congressional testimony by Federal Reserve Chairman Jerome Powell, who indicated that the Fed would maintain its hawkish monetary course to rein in inflation, possibly at the expense of a recession.

Rising prices, which have stemmed heavily from increased energy costs, continue to bedevil the U.S. economy, although West Texas Intermediate crude oil, a measure of wider energy markets, fell below $102 on Wednesday. Meanwhile, U.S. Treasurys and the U.S. dollar, which investors consider safe haven assets, closed lower.

“Wall Street remains hopeful that the Fed will monitor the impact of rate hikes on the economy,” Oanda’s Moya told CoinDesk, adding that “risk appetite remains elusive as global recession fears intensify.”

?Bitcoin (BTC): $20,166 -2.59%

?Ether (ETH): $1,071 -4.03%

?S&P 500 daily close: 3,759.89 -0.13%

?Gold: $1,840 per troy ounce +0.29%

?Ten-year Treasury yield daily close: 3.16% -0.151

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at

Powell told the Senate Banking Committee that a soft landing “is going to be very challenging” and that a recession is “certainly a possibility.

“We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential that we restore price stability, really for the benefit of the labor market, as much as anything else,” he said.

Inflation is still running at a four-decade high of 8.6% in May, a level that surprised economists, traders and even Fed officials. Powell said the Fed will continue to raise interest rates until it sees a clear sign that inflation is cooling down.

“Financial conditions have already priced in additional rate increases, but we need to go ahead and have them,” he said.

Voyager plunges: Crypto broker Voyager Digital’s (VOYG) shares fell more than 60% after it disclosed its exposure to beleaguered hedge fund Three Arrows Capital (3AC) and said it may issue a “notice of default” to the crypto fund if the hedge fund fails to make a loan repayment. This comes after the firm announced that its exposure to 3AC consists of 15,250 bitcoins ($370 million) and $350 million USDC. The broker’s token, VGX, dropped 20% in the last 24 hours, It has fallen to 45 cents from $3 this year. Read more here.

dYdX starts its own blockchain: Cryptocurrency exchange dYdX announced that it is launching a standalone blockchain in a bid to decentralize the platform. The layer 1 blockchain will become the home of the DYDX token. The token’s price rose 7% after the announcement, making it one of the few gainers among altcoins. Read more here.

Ledger dives into NFTs: Crypto hardware and security firm Ledger is launching a non-fungible token (NFT) marketplace and Web3 services platform for enterprises, the company announced Wednesday at the Ledger Op3n conference at NFT.NYC. Ledger is also rolling out a line of other products focused on Web3 education and security. The firm is working with brands, such as LVMH’s Tag Heuer, NFT collection DeadFellaz and Brick/Babylon, to list their assets on the marketplace. Read more here.

Listen ?: Today’s CoinDesk “Markets Daily” podcast discusses the latest movements on the market and Sam Bankman-Fried, the billionaire bailing out some crypto firms.

US Fed Evaluating SEC’s Position on Digital Assets Custody, Powell Says: The SEC’s directive that customers’ digital assets may need to be treated as being on an exchange’s balance sheet has banking regulators scratching their heads about how it will work.

Digital Dollar Would Secure Greenback as Global Reserve Currency, Lawmaker Argues: Rep. Jim Himes (D-Conn.) published a 15-page white paper arguing in favor of a digital dollar.

BoE’s Cunliffe Cautions Against 2008 Repeat With FTX’s Derivatives Rule Change Proposal: The Bank of England official is skeptical whether decentralized finance will ever be a thing.

Chainalysis Launches 24/7 Hotline for Crypto Crime Victims: Ransomware actors raked in an all-time high of $731 million in crypto payments in 2021, and 2022 is on track to be another record year for crypto-enabled cybercrime.

Binance.US Launches Zero-Fee Bitcoin Trading: The exchange plans to eliminate the charges for more tokens in the future.

Prime Trust Raises $107M With Eyes on Crypto IRA, Tokenized Asset Products: The Las Vegas company is going into build mode, bear market be damned.

Doodles NFT Project Taps Pharrell Williams as Chief Brand Officer: The leaders of the blue-chip collection made the announcement to a packed crowd of Doodle holders at NFT.NYC.

EBay Acquires NFT Marketplace KnownOrigin for Undisclosed Amount: The move comes one month after eBay released its debut collection of NFTs.

Most digital assets in the CoinDesk 20 ended the day lower.

Biggest Gainers

Biggest Losers

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.


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